In the search for a suitable bone graft substitute, a study was conducted using a material that combined a proven osteoconductive composite, hydroxyapatite-calcium sulfate (HA/CS), with an osteoinductive factor, bovine osteogenic factor (OF). The initial study demonstrated the osteoinductive potential of OF in the rabbit muscle model. Once satisfied that the OF was active, it was added to the HA/CS composite and placed in 8-mm trephine defects in the rabbit cranium. This HA/CS/OF was directly compared to HA/CS augmented with a control protein, rabbit serum albumin (RSA). Animals were sacrificed at 4 and 8 weeks. Results demonstrated increased bone formation with the addition of the OF to the composite with bridging of the defects, in most cases, by 4 weeks. No bridging was seen, at this time period, in the other defects left unfilled or filled with HA/CS/RSA. Osteogenic factor, with the appropriate delivery system, can induce bone formation in the rabbit muscle. It may also increase the rate of bone formation at early time periods in a bony defect site when the delivery system is the osteoconductive composite HA/CS.